Susan Hawley: UK leader pledges to bring SFO under political control
Monday, May 22, 2017 at 8:18AM
Susan Hawley in National Crime Agency, Serious Fraud Office, Therea May

British Prime Minister Theresa May has called for an early election on June 8UK Prime Minister Theresa May’s manifesto for the re-election of the Conservative Party launched last week commits her government if it wins (which all bets are on that it will) to incorporating the Serious Fraud Office  into the National Crime Agency.

May has long wanted to scrap the SFO, for reasons that are not fully clear, and bring it within the remit of the National Crime Agency (NCA). She tried and failed twice to do so in her previous role as Home Secretary, but met stiff resistance.

Some claimed it was empire building -- the NCA was May’s pet project launched back in 2013 and meant to be the UK’s equivalent to the FBI. Others have suggested that she is committed to bringing the SFO under ministerial control.

The move has serious implications for the SFO’s ability to operate free from political interference.

Whereas the SFO is overseen by the UK’s Attorney General, the NCA is directly answerable to the Home Secretary, who is a government minister. The SFO’s arms length from government for the kind of cases it investigates is essential. The SFO is investigating some of the largest UK companies, many of whom are key partners in the government’s industrial strategy and have regular and close contact with government.

Additionally, some of the companies and individuals that it investigates are political party donors or have high profile former political figures on their boards.

The loss of independence is only part of the picture. The manifesto commitment will have an immediate knock on effect on the SFO’s ability to complete some of its key high profile investigations underway, and the willingness of companies to cooperate in those investigations. Further, it is likely to start facing immediate problems in retaining and recruiting experienced and qualified staff.

But that is nothing compared to the situation that the UK will be in if May is determined to see through the commitment. While the SFO may not yet be faultless, it has turned a corner in the past few years and is just starting to hit its stride. It has recruited a committed, motivated and experienced staff. If May sees through her plan, whether it includes moving the SFO wholesale into the NCA, or splitting its prosecutors into the Crown Prosecution Service and its investigators into the NCA, it is likely to lead to a huge haemorraghing of expertise to the private sector.

The NCA is not a yet a widely respected organization within law enforcement circles and still has to prove itself in a meaningful way. In 2015, it was forced to admit that every single one of its live investigations would have to be reviewed after “systemic” use of potentially unlawful search warrants.

In one of the three of the NCA’s money laundering investigations that collapsed as a result, a judge rebuked the NCA for “egregious disregard for … constitutional safeguards.

The recent creation of an International Corruption Unit within the NCA, merging City of London and Metropolitan anti-corruption units, is not a good augur of what happens when good work gets subsumed into the NCA. The City of London police refused to go and few of the Metropolitan police originally seconded to the Unit have remained. The NCA has had to recruit from scratch, and has yet to bring charges in a single international corruption case.

May’s manifesto move on the SFO meanwhile pre-empts the outcome of a review of the structures in place for fighting economic crime in the UK which she herself commissioned -- albeit informally. That review was still crunching data on the performance of the different agencies as the manifesto was announced. It is hard to see how May’s manifesto commitment is a rational, evidence-based decision about what would really improve fighting white collar crime rather than an impulsive desire to see one of her pet projects through.

One can’t underestimate the potential damage to the fight against white collar crime in the UK that this move could cause -- damage that the UK can ill-afford as it heads into the unchartered territories of Brexit. The move is likely to lead to major criticism from bodies such as the OECD, and a huge dent in the UK’s international reputation on fighting financial crime.

The inevitable disruption to current investigations and damage to overall operational effectiveness that is almost certain to result means that if the SFO’s talent heads into the private law sector it may well find itself with few companies to defend for a good many years to come.

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Susan Hawley is Policy Director of Corruption Watch, which last year produced a report on Corporate Settlements in foreign bribery cases, "Out of Court, Out of Mind: Do Deferred Prosecution Agreements and Corporate Settlements Fail to Deter Overseas Corruption?" The report is available here.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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